Monthly Archives: September 2014

Using prior estimate for social cost of carbon, we can calculate externalized cost of all carbon emitted in the USA.

I calculate it as between $234B/year and $1,254B/year. This equates to 1.4% to 7.4% of GDP, $0.7k to $4.0k/person/year, or $2.0k to $10.6k/household/year. This social cost accounts not only for greenhouse gasses, but also premature deaths from pollution, etc. My layman’s interpretation of social cost is that if properly priced in, it fully accounts for a carbon neutral society.

Currently, this cost is externalized. If internalized, free markets would sort it out. This sorting out would almost certainly find major points of efficiency along the way leaving the final cost less than these figures.

***See calculations below

1. Assume all emitted carbon comes from oil, coal, and natural gas consumption. We can find the amount consumed here.